Officials of the Development Bank of Ethiopia (DBE) appear determined to recover a loan extended to the developer of the yellow behemoth prominent on the city's skyline, on Africa Avenue.
Although DBE threatens to take over the 12-storey building, to put it on the auction bloc, the developer, Yemiru Nega, claims to have the ability to fullfil an agreed loan recovery plan.
Officials at the state-owned Development Bank of Ethiopia (DBE) seem to have made up their minds to repossess one of the capital's landmarks, Dembel City Centre, in their bid to recover 221.4 million Br the Bank claims from the developer, Yemiru Nega.
A major shareholder and general manager of Yencomad Construction Plc, the prominent businessman took 186 million Br in loans from DBE 10 years ago to build the largest shopping centre Addis Abeba has today, on Africa Avenue (Bole Road). The vast structure with a blue-glass facade gracefully stands on an 8,000sqm plot, housing 114 shops and offices, after it was opened in 2001.
The head office of Wegagen Bank is housed in this building, occupying the sixth and seventh floors, while others banks such as the Commercial Bank of Ethiopia (CBE) and Nib International Bank have branches inside. There is also an expansion in progress that includes, among other things, parking facilities under construction in a southern wing.
DBE wants to foreclose the 12-storey building held as collateral against the loan. It is the first time the Bank has made such a forceful move, although a letter of foreclosure notice was issued to the developer six months ago, sources disclosed. Yemiru has proposed a recovery scheme where he would pay two million Birr for the first month and a series of five million Birr payments in the subsequent months, until such time that he pays back the 25.3 million Br arrear in interest.
He paid the first instalment two weeks after both parties had agreed on a recovery plan. Officials at the Bank claim that he has interrupted servicing his debt since then, a reason that prompted Getnet Temechew, head of the Legal Department, to write a letter - on November 12, 2007 - to the Land Development and Administration Department of Cherkos District. He requested the Department to organise officials of Kebele 20, where the building is, and the District's Police Department to enforce the takeover of the building.
"The Bank has decided to sell the property held as collateral to pay for the debt," says the letter. "We request for your customary cooperation so that the developer hands over the building with no precondition."
The Bank wants to take the building away from the developer on December 6, 2007.
If pursued by DBE officials, it will be a major loss to the businessman who made his fortune from textile wholesale at a stall found in Mercato, which he has owned since the early 1970s. Yemiru was also one of the 10 developers granted plots free of lease in the early 1990s and secured the plot where Dembel lays in 1994.
He has also installed a plant that crushes rocks at a place commonly known as Yerer Ber before he began construction of Dembel City Centre, which consumed an investment of over 300 million Br. Yemiru established Yencomad Construction, which carried out the construction works of Dembel itself, at a capital of 56 million Br. The firm became one of the domestically growing companies mainly involved in the road construction sector.
"I will continue to service my debts according to the recovery plan," Yemiru told Fortune. "I neither know nor understand why all of a sudden the Bank decided to take over the property, when I was out of the country on a business trip. The delay from my part was as a result of my absence. I will settle it next week."